A recent Yahoo article by Robert Kiyosaki talked about the high negative impact that fund fees have on the investor's rate of return.
I was struck by the aggression with which some people attacked his article in the comments that were left. As a person who works in the wealth management industry, I think Kiyosaki's comments were quite valid.
For example, in the fund industry, a standard statement by senior executives of fund companies is that "Mutual Funds are sold, not bought".
The above statement speaks to the fact that funds rely on extensive marketing and catering to the latest trend in order to grow their Assets under Management (AUM). Investors pay for this marketing and sales as well as the core fund management through the Management Fees, which are disclosed as a Management Expense Ratio (MER). Fund companies run like any other business. Simply put, the higher the AUM, the greater the fee base, and thus the greater the revenue to the fund company (and presumably the higher the profits). Very simple.
That said, there are still many good funds out there which commonly beat the market, even with high MERs. There's also a lot of garbage. Fund sites like globefund.com and morningstar.ca offer investors decent tools for picking mutual funds.
Relying on the fund companies or your advisor to look out for your best interests is a lot like a non-swimmer jumping into the deep end of a busy pool and trusting the lifeguard to realize they are drowning and save them. It might happen... Then again it might not. There's nothing wrong with trusting your advisor (you should be able to, otherwise its time to change!). But you have to educate yourself to ensure decisions are being made in your best interest.
